This morning the Bureau of Labor Statistics reported that the United States economy added 943,000 jobs in July, which was almost identical to the upward-revised 938,000 in June. After the unemployment rate was flat for months, July also saw a big drop of 0.5 percentage points down to 5.4%. The size of the labor force has been holding steady, so these gains were driven by unemployed workers finding jobs.
Combined, these last two months show a strong recovery of the labor market, with an acceleration of job growth from the spring and some lessening of recent supply-side strains. Recent weeks have seen large drops in workers on unemployment rolls, particularly in the states that have ended participation in the enhanced federal unemployment benefits. While a complete picture is still coming into focus, today’s report suggests that this has been a strong contributor to job gains. In particular, the July report saw strong employment growth in the food service sector. This lower-wage sector has faced challenges throughout the pandemic, most recently had difficulties filling job openings, in part due to competition with the enhanced unemployment benefits. Today’s report also showed a strong contribution from education hiring, as more schools than normal retained teachers through the summer and ramped up hiring for a planned return to instruction in the fall.
Both of these trends – growth in food services and education employment – are threatened by the increased virus spread with the delta variant and re-imposed public health restrictions in response. September had looked to mark a larger upturn in the economy, with the full expiration of unemployment benefits and the return to schooling and easing of childcare pressures. But that upturn is now in doubt.
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Noah Williams is an adjunct fellow at the Manhattan Institute and the Juli Plant Grainger Professor of Economics and director of the Center for Research on the Wisconsin Economy at the University of Wisconsin–Madison.